Unemployment rate drops to 8.3%, 243K jobs added

posted at 8:40 am on February 3, 2012 by Ed Morrissey

The US economy had a good month for job creation in December, according to the new report this morning from the Bureau of Labor Statistics. We added 243,000 net jobs and the unemployment rate fell two-tenths of a percent to 8.3%:

Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month.

There seemed to be a glimmer of hope on workforce participation, too, although not much motion:

After accounting for the annual adjustments to the population controls, the employment-population ratio (58.5 percent) rose in January, while the civilian labor force participation rate held at 63.7 percent. (See table A-1. For additional information about the effects of the population adjustments, see table C.)

The number of persons employed part time for economic reasons, at 8.2 million, changed little in January. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)

In January, 2.8 million persons were marginally attached to the labor force, essentially unchanged from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

The key measure of labor underutilization, the U-6 number, declined slightly on a seasonally-adjusted basis to 15.1% from 15.2% in December. That is the lowest U-6 number since February 2009, although it’s still far above the 8-9% range of the second Bush term. That measure dropped most significantly in the fourth quarter of last year, falling 1.2 points.

There were some changes made to the surveys this month, which is a routine part of adjusting for population shifts. In this case, it tended to be a wash for the overall jobless rate but lowered participation rates by three-tenths of a point. That’s why the report says that the civilian-population participation rate was unchanged at 63.7% when it had been 64.0% in December. The BLS will not restate past results as part of their update. The U-6 numbers are not based on that survey and so are more consistent within their series.

Employers have added an average of 201,000 jobs per month in the past three months. That’s 50,000 more jobs per month than the economy averaged in each month last year.

The Labor Department’s January jobs report was filled with other encouraging data and revisions. Hiring was widespread across many high-paying industries. Pay increased. And the economy added 200,000 more jobs in 2011 than first thought.

And the unemployment is nearly a percentage point lower than over the summer, when feared a recession was imminent. The last time the unemployment rate has dropped for five straight months was in late 1994.

January’s non-farm payroll with a 243k increase was sharply above a consensus increase of 150k with positive if undramatic back month revisions. The breakdown looks positive almost across the board with manufacturing at +50k particularly impressive. Workweek data was improved, sustaining an upwardly revised December level, though hourly earnings with a 0.2% rise merely met consensus. The unemployment rate saw another significant fall, by 0.2% to 8.3%, when the consensus was for no change, with the fall due to increased employment not losses in the labor force. The broader U-6 measure of labor market slack, after three straight 0.4% plunges, saw only a modest fall of 0.1% to 15.1%, but there can be no doubts over the positive nature of this report. There is only one obvious significant caveat, an unusually mild winter restricting the number of seasonal layoffs, which are always heavy in January. Unadjusted, January payrolls still fell by 2.689 mln.

We’ll see if this continues, or whether it plateaus as the CBO expects. If it continues, Barack Obama might start seeing his approval numbers sliding upward again.

Update: Zero Hedge points to a curious change in the number of people not in the labor force:

A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo: 1.2 million people dropped out of the labor force in one month!

I’m looking at the A-16 historical record (for people not in the labor force, not seasonally adjusted), and the number of people 16 years or older not in the work force changed from 87,212,000 in December 2011 to 88,784,000 in January — which is an increase of 1.572 million, not 1.2 million. That doesn’t affect jobs added, which are calculated in a separate survey, but it would tend to impact the U-6 rate by increasing the denominator of the calculation, which would lower the resulting ratio or percentage. Let’s take a look at the raw numbers in those categories:

Want a job now (in thousands, total set) — 6495, up from 6135 in December

Plus, Available to work now — 2809, up from 2540

Plus, Discouragement over job prospects — 1059, up from 945

Plus, reasons other than discouragement — 1749, up from 1595

The drop in the U-6 looks like it’s indicating a decline when we’re in fact seeing a modest increase in discouragement, even with the added jobs.

Update II: Steve Eggleston writes to tell me that Zero Hedge was looking at seasonally adjusted figures from table A-1 while I was checking A-16. The change in A-1 is 1.177 million, rounded up to 1.2 million. Also for clarification, the “plus” items in the bulleted list above are subsets of the “Want a job now” category.

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Obama will have to face reality in an election. He can remove people from the labor force to manipulate statistics in newsprint but he can’t remove them from the voting booth. Nobody in reality world sees the economy improving and with coming tax hikes, more regulations, and Obamacare things will continue to worsen. Three years of failed policy will doom Obama and he can’t run from that record regardless of how much he manipulates statistics.

What’s sad is manipulating employment rate statistics by dishonestly reducing the numerator to the equation in order to achieve a preordained number. Employing such deception merely to enhance one’s reelection prospects is never something to be proud about.

tommyboy on February 3, 2012 at 11:06 AM

I really don’t see the point in all of this paranoia about the numbers being manipulated, absent real evidence of manipulation. Yes, the MSM and Obama will run around, and pretend that things are looking up, but everybody knows the truth. The conomy is stagnating. For every good piece of economic news, we get a countervailing piece of bad news. Things are not good.

I gather that based on the comments I read here. folks here are rooting for America to fail. It very sad. That unemployment rate is dropping. Jobs are being added, what is not good to like about this?

liberal4life on February 3, 2012 at 10:57 AM

I know you Obama fans are desperate for any good news you can get, but you’re ignoring reality. The outlook for 2012 growth is rotten- probably worse than last year, which was rotten. The CBO said yesterday unemployment will rise again to 9%

And don’t forget this will be a historic year- first peacetime period ever to have over 100% debt to GDP.

And Obama will go down in history as the first, hopefully only president to have trillion plus dollar deficits every year in office.

You’re not just rooting for the country to fail, you’re supporting it with hopeless devotion.

American economy always rebounds. For all you right wing nuts betting on bad economy on November 2012 will be very disappointed

liberal4life on February 3, 2012 at 8:50 AM

You should lay off those illegal pharmacological agents you are using while posting. Total number of employed down from a year ago while the working age population has increased but magically the unemployment rate has decreased. Do you at all see anything wrong with that picture.

Settle down, REAL American. Maybe unemployment will go up next month and you can be happy again!

KeninCT on February 3, 2012 at 11:10 AM

You could use a good course in data analysis. Total number of employed Americans down. Total number of working age Americans up yet the unemployment numbers decrease. That doesn’t strike you as odd? The data manipulators are smoothing the real number to get the values they want. Gee where have I been seeing this take place for the past 15 years.

I’ll believe when numbers aren’t ZERO’D. Also, though I don’t know how to interperet the following, I’d feel better if there weren’t cheerleaders, then skeptics/cynics wouldn’t have to be as loud as they try to be. Balance is beautiful.

It’s just too bad that Obama and his clueless OWS supporters think the increase is a bad thing. I’m sure they’d like to do something about it, if given the opportunity…

cicerone on February 3, 2012 at 11:20 AM

The resurgence in the S&P 500 was the result of the Fed purchasing troubled assets (Mortgage Backed Securities or MBS’s) at par value – what their previous owners declared they were worth, not what they would have brought at market value. This was seen as a necessary fiction that would in theory prove to be true over time.

The problem in the United States is that the Mortgage Backed Securities (MBS’s) are worth less far less than they should be because:

Many of them have involved millions of mortgages executed fraudulently with the MERS system which resulted in broken chains of title (i.e. the recovery process requires the seller to repay the original purchase price to the holder, the “banks” would have to pay par value back to the Federal Reserve and a host of other entities. This is a problem because the banks don’t have that type of capital.)

The same mortgage has been sliced and diced among multiple MBS’s. This is criminal fraud on a scale never achieved before. It is the largest applicable situation for use of the R.I.C.O. Act put in place in the early 1970’s to enable the breaking up of organized crime by allowing the seizure of not only the “illegally gotten goods” seized at the scene of a crime but ALL the personal assets of ALL of the individuals deemed to have conspired together to see the crime committed.

Both sets of crimes have been documented for easy prosecution (e.g. the facts are prima facie and any assistant D.A. should be able to get plea deals from the small fish in less than five minutes – because a conviction would take a couple of days and these dear folks would be going to prison to shower with Bubba for twenty years) by the MERS systems and all of the documentation required to create the trust documents known to us a MBS’s. In point of fact, the MERS database makes documenting the crimes committed remarkably easy.

The current administration is pushing very hard for a national settlement with all the banks that would pardon all the crimes committed for $ 25 billion – or about the amount of land clerk office filing fees the banks have avoided by using MER’s for the last 10+ years.

Reuters had this headline two weeks ago:

Insight: Top Justice officials connected to mortgage banks
and Reuters is the other end of the spectrum from Hot Air.

KeninCT do some research, get in touch with the REAL world.

Regardless of one’s political leanings, being willfully ignorant of the facts is not defensible. You will no doubt be overjoyed to hear the Obama administration is trying to clear out the backlog of foreclosed homes by selling them en masse to “investors” (which turns out to be the self same banks that profited from the mortgage fraudclosures.

I AM a workforce dropout. Haven’t worked in two and a half years.
Seems like they’d be able to tell what the real unemployment numbers are from SS or IRS records, but why the heck would they want to do that?

The New York AG is a Democrat. He has been the strongest holdout to the national settlement. For my money, Obama decided that since he couldn’t be persuaded to get on board despite massive pressure from outside sources, it was better to “have him inside the tent pissing out, than outside the tent pissing in”.

My current employer is closing its US manufacturing facility at the end of April and is headed “offshore” . Prospects for finding a new position are grim due to the overwhelming number of “interships” posted by employers. Good luck and keep the faith, sometimes thats all we have!

This one of the biggest manipulated scams in our history. The collusion between the democratic party and the mainstream media has just exposed they have absolutely no regards for the truth. They are using the ignorance of the American people to disguise what is actually happening to our economy. As hundreds of thousands are dismissed from the unemployment statistics for being unemployed too long, they become non-existent and those remevoed from the true unemployed still exist as the unemployment rate goes down. The lie that thousands of unemployed have stopped existing as a statistic is an unbelievable corrupt act by our government and mainstream media. The worse part if it becomes abudantly clear you cannot believe your leaders, who do you believe? The mainstream media has become a liberal propaganda machine and nothing else.

If I looked, I could probably find work. I’ve become rather spoiled in my role as a househusband. Wife has a very good job and we are debt free. I feel really bad for the millions of people that aren’t as fortunate as I, it’s got to be rough for them. Thanks for the kind words though.

Here is a graph on US unemployment rates since 1950: notice how after unemployment hit a high of 10.8% in October of 2009 (despite 0bama’s promise that it would go no higher than 8%) it took far longer to drop than after any previous spike:

Previous spikes in the unemployment rate were followed by quick and and mostly steady declines; due to 0bama and his anti-business policies, unemployment has remained higher and declined slower, with more subsequent smaller rises in the ue rate, than after previous spikes…and the left wants to take credit for this?

These numbers are ALWAYS a meaningless joke, even when they are supposedly in the “acceptable” range, but the politicians know this magic number is one of the few things the ignorant sheeple voters follow.

Nothing stops this or any president’s goons from going to the BLS and telling those in charge that if the numbers don’t improve they will be out of jobs.

Expect the numbers to stay the same or improve based on Obama’s monthly poll numbers, right up to election day. Then there will be “adjustments” and “corrections” in teeny tiny ultra-fine print on page 6 of the gardening section in your local newspaper. Again, not that it matters.

Ok, after a lot more reading; the “participation rate” fell, so they’re calling staying at the same number an increase. I’m not sure I buy that as an increase; but feel free to accept their explanation if you like.

You could not have picked a better moniker! Actually, we are not rooting for failure, we are pointing out the lies of your POS-POTUS!

Rush was just going over some raw data from the employment report and pointed out that in Dec 2011 there were 132,900,000 people employed and last month there were only 130,400,000. How in the hell does the rate drop when there are 2.5 MILLION fewer people working?

Obamao and his whole administration are nothing but liars, cheats and thieves and should all be frog marched to Gitmo for what they are doing to this country!!!!!

Rush was just going over some raw data from the employment report and pointed out that in Dec 2011 there were 132,900,000 people employed and last month there were only 130,400,000. How in the hell does the rate drop when there are 2.5 MILLION fewer people working?

Obamao and his whole administration are nothing but liars, cheats and thieves and should all be frog marched to Gitmo for what they are doing to this country!!!!!

Sporty1946 on February 3, 2012 at 2:13 PM

The data need to be deseasonalized. Rush was looking at the raw data, which were not deseasonalized.

Obama and his crew are liars, but this report is probably fine. Still, I wouldn’t be surprised to see a downward revision next month.

Except that Reagan didn’t artificially reduce the size of the labor pool to bring the numbers down. If he tried to do that our socialist/marxist lame stream media would have trumpeted that from the rooftops all day every day.

They would howl “DEPRESSION!” every chance they got just as they did during Bush’s administration. But now they are willing acomplices to Zero’s propaganda.

I’m left-of-center in my politics, but I like to keep up on the righty blogs, and HA is my favorite. This post is one of the reasons why.

I commend Ed Morrissey and HA for the admirably straightforward nature of your presentation on today’s jobs numbers. Yes, you end it with a bit of downward spin. But you do not employ the kind of hysterical overreaching and fact-distortion that other blogs (and many of the commenters here) have resorted to when reacting to the news, trying to make these numbers seem like BAD news. These figures are undeniably GOOD news for this country –though we have a long way to go, of course– but Ed recognizes that basic fact. Kudos to Hot Gas!

(Now, if you could only get rid of the played-out and rather fey “Oh My” prefixes and the “or something” suffixes on your headlines…)

I’m left-of-center in my politics, but I like to keep up on the righty blogs, and HA is my favorite. This post is one of the reasons why.

I commend Ed Morrissey and HA for the admirably straightforward nature of your presentation on today’s jobs numbers. Yes, you end it with a bit of downward spin. But you do not employ the kind of hysterical overreaching and fact-distortion that other blogs (and many of the commenters here) have resorted to when reacting to the news, trying to make these numbers seem like BAD news. These figures are undeniably GOOD news for this country –though we have a long way to go, of course– but Ed recognizes that basic fact. Kudos to Hot Gas!

(Now, if you could only get rid of the played-out and rather fey “Oh My” prefixes and the “or something” suffixes on your headlines…)

Drew Lowell on February 3, 2012 at 4:18 PM

I give you credit for trying to be fair-minded. However, this month’s job numbers are only good relative to what we’ve been seeing over the last 3 years, or so. Given the depth of the recession, the weakness of this recovery is very disconcerting.

I’m left-of-center in my politics, but I like to keep up on the righty blogs, and HA is my favorite. This post is one of the reasons why.

I commend Ed Morrissey and HA for the admirably straightforward nature of your presentation on today’s jobs numbers. Yes, you end it with a bit of downward spin. But you do not employ the kind of hysterical overreaching and fact-distortion that other blogs (and many of the commenters here) have resorted to when reacting to the news, trying to make these numbers seem like BAD news. These figures are undeniably GOOD news for this country –though we have a long way to go, of course– but Ed recognizes that basic fact. Kudos to Hot Gas!

(Now, if you could only get rid of the played-out and rather fey “Oh My” prefixes and the “or something” suffixes on your headlines…)

Drew Lowell on February 3, 2012 at 4:18 PM

I don’t believe in politicians, period. I used to be in the game. I’ve said for years that if the average person knew how manipulated their news has been over the past 25 years … they would literally vomit.

The Obama administration has gone far past what was previously considered the boundaries of the game.

“These numbers” are false. How can they be good if they are falsified? By the way, go to trimtabs.com and look at their research on the subject. Read articles that have been published in the NYT, among others, that point out the disparities between reality and the BLS reporting.

If you put a political party ahead of your family, then go ahead and be happy with the numbers. It won’t matter to you that economic reality doesn’t care what numbers are reported. The unemployed are still unemployed. The underemployed are still going to be underemployed. The economic nightmares faced by those who have been removed from the denominator to get to a lower percentage number won’t matter to you in the least.

But please, don’t call yourself “left of center” – what you are is self centered.

However, this month’s job numbers are only good relative to what we’ve been seeing over the last 3 years, or so.

But they are VERY good relative to what we’ve been seeing over the last FOUR years. You can’t honestly gauge how far we’ve come without comparing to how low we sunk in the annus horriblus of ’08.

Given the depth of the recession, the weakness of this recovery is very disconcerting.

I don’t disagree, which is why I noted that “we have a long way to go, of course.” But it is incontrovertible that the economy is — at long last and however haltingly — on the mend. The point of my comment was to laud Morrisey for NOT doing what so many of your compatriots are doing today. They are so desperate to deny the President any credit for the jobs upswing that they tie themselves into knots trying to pretend that the upswing is not happening at all.

This was a relatively good number and I’m glad for it. Relative in the sense that it is an improvement over the last 3 years. In the course of a healthy economy, this number is mediocre at best. The economy needs to generate about 200k new jobs per month to keep employment steady. This barely skims that mark. When one considers that most recoveries see 5% GDP growth and much better job growth it is a stretch beyond breaking to call what we are experiencing an economic recovery.

One number, one data point does not make a trend however. We’ve seen the occasional good number a few times before over the last few years. They have been isolated spikes, followed by the same old same old. I hope that even this barely acceptable mark can be sustained, but I doubt that it will.

We haven’t had a recovery from our great recession because of the criminal economic mismanagement from PBHO. From his ruinous stimulus to his unconscionable bailouts, handouts and imposition of stifling regulations we are in the doldrums and won’t be getting well again until he is gone.

But it is incontrovertible that the economy is — at long last and however haltingly — on the mend

yeah, ok lefty. no matter how much lipstick they put on this pig and cook the numbers to make it look better, THE DAMAGAGE HAS BEEN DONE AND CAN NEVER BE REVERSED in the form of debt, deficits and massive government spending. your a tool, period

its pathetic that we’re even talking about these crappy numbers more than 3 years after this jerk got in the white house. we should have been in a full blown economic expansion more than 2 years ago already if it wasnt for this dooshbag.

still using words like recovery 3 years later? LOL. maobama belongs in an orange jumpsuit for what he’s done. if your not outraged at this garbage, your not paying attention

Rush was just going over some raw data from the employment report and pointed out that in Dec 2011 there were 132,900,000 people employed and last month there were only 130,400,000. How in the hell does the rate drop when there are 2.5 MILLION fewer people working?

Obamao and his whole administration are nothing but liars, cheats and thieves and should all be frog marched to Gitmo for what they are doing to this country!!!!!

Sporty1946 on February 3, 2012 at 2:13 PM

Quit trying to show liberals what’s behind the curtain. It distracts the from watching Dear Leader read to them from his teleprompter that “It’s all good, nothing to see here, move along”.

Anyone that believes the unemployment numbers they are feeding are accurate are complete and utter morons!!!

Obama will have to face reality in an election. He can remove people from the labor force to manipulate statistics in newsprint but he can’t remove them from the voting booth. Nobody in reality world sees the economy improving and with coming tax hikes, more regulations, and Obamacare things will continue to worsen. Three years of failed policy will doom Obama and he can’t run from that record regardless of how much he manipulates statistics.

Okay, I ran through all the economic information in detail just now, and here is my take.

The main reason for the drop in unemployment is the mild winter. Some jobs were added elsewhere, but they’re roughly in line with the same anemic job growth we’ve seen for the past year.

The mild winter however, allowed construction companies to resume or begin projects that otherwise would have been put on hold until next spring. This meant additional hiring, but is not indicative of a robust recovery.

The problem, is that while the construction industry has began work earlier than expected, the actual demand for new construction projects is about the same. This means that as soon as current construction jobs are wrapped up, some construction workers will need to be laid off, which will send unemployment rate in the wrong direction.

Another issue with unemployment this summer, is going to be the return of those that previously did not participate in the job market. Part of the reason the job-rate isn’t higher, is because many individuals gave up looking for jobs altogether and instead took college classes or whatnot. Well, the problem is that people cannot stay in college indefinitely, particularly cash strapped individuals that were likely only able to afford a 1 or 2 year degree. We are expected to see some people who formally exited the market return this year. Combine that with population growth and this should drive the unemployment rate still higher.

Basically, it seems unlikely that we’re going to continue to see the jobless rate decline, at least at this rate. For it to do so we would need either a fairly robust recovery, or the Obama administration would need to fudge their numbers so badly that they would be easily caught.

Far as I can tell, there is already some slight fudging already, and a couple economists have noticed. Further fudging would probably raise quite a few eyebrows.

So what else is new? As Mark Twain said: “there are lies, da*ned lies and statistics.” The unemployment figure is a number, i.e., the result of a larger calculation. To understand the number you have to know what the larger calculation was, and that’s the information they try not to divulge.